Kmart emerges early from bankruptcy
Kmart has been rescued from bankruptcy two months earlier than planned after selling 600 of its stores and reducing its debts by 80%.
Link: Kmart executives in SEC civil suit
The retailer sought Chapter 11 bankruptcy protection from creditors in January of last year after dwindling sales and rising debts forced it into the red.
Chief executive Julian Day, who will receive a $1m bonus for his part in the restructuring, said the company was ‘jubilant’ about coming out of bankruptcy.
ESL investments, a hedge fund worth $5bn will become Kmart’s largest shareholder with a 49% stake in the company.
But the reorganisation leaves shareholders with nothing, although bondholders and banks will receive new bonds.
But all is not rosy at the discount retailer. Two former Kmart executives were recently charged with a $42m accountancy fraud by the Securities and Exchange Commission.
An independent investigative team which included accountants from Deloitte & Touche was appointed to look into the US discount retailer following concerns about ‘unspecified accounting matters’ following the bankruptcy.
The company’s auditors were PricewaterhouseCoopers.
